In Re Streckrich Petro Corporation, 08-31860 - Eastern District of ...

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shall be the average of all three (3) appraised values. (Ex. 5 at §20.1(c).) The Agreement provides that Royall and SPC also may agree to an alternate price if they so choose. So -- to exercise the purchase option, the Agreement states that SPC must pay the greater of five million dollars or the average of several appraised values. Neither of these two possible option prices is nominal - a factor which also weighs in favor of the conclusion that the Agreement is a true lease. c. The term of the Agreement does not cover the useful life of the property. Another factor to consider when looking at the totality of the circumstances is “whether the lease term covers the useful life of the property.” Pummill, 353 B.R. at 668. In the present case, the “property” consists of gas stations and convenience stores. The term of the Agreement is twenty years, with the option of extending the term for a maximum of twenty years. Although there was no testimony as to the age of any of the gas stations, it does not appear likely that the 20-year term covers the useful life of such property. The properties at issue are buildings that will continue to be useful long after the term of the Agreement has ended, even assuming that the Agreement is extended four times. Again, this fact weighs in favor of a conclusion that the Agreement is a true lease. 18
d. The remaining facts support a finding that the Agreement is a true lease. i. The parties appear to have intended the Agreement to be a lease agreement. As noted in Pummill, “Missouri cases look at the intent of the parties which can be determined from a consideration of the entire instrument, and the circumstances under which it was made.” Id. SPC argues that the primary purpose of the Agreement was not to find a tenant for the Income Producing Properties but to create a device to transfer cash to the Estate in exchange for the Fisca stock . . . When $4.5 million of cash was not available from [third party financier] Servant to pay to the Estate to conclude the stock purchase, the Estate created substitute financing to accomplish the same result. The economic substance of the Lease Agreement was at all times to create a loan to allow the Estate to conclude the Stock Purchase. (Docket No. 55 at 4-5.) SPC further argues that The Estate’s representatives knew that the Income Producing Stores were going to be operated, possessed and controlled by Fisca, knew that any arrangement with Streckrich in relation to the Income Producing Stores was solely for the use and benefit of Fisca and knew that payments could only be satisfied from and by Fisca. As a result, the facts and circumstances surrounding the Stock Purchase Agreement requires [sic] a determination that this Lease Agreement is not a bona fide lease subject to the requirements of §365(d)(4) but rather is a debt instrument integrated with the Stock Purchase Agreement and the various Notes and serves to create and identify a seller-backed loan to allow the transaction to conclude. (Docket No. 55 at 7.) Although SPC argues that the parties intended that the Agreement be a “debt instrument” to allow the Stock Purchase Agreement to conclude, other circumstances in the case, and various provisions in the Agreement, contradict this assertion. If SPC 19
Page 1 and 2: UNITED STATES BANKRUPTCY COURT EAST
Page 3 and 4: Streckmann (“Streckmann”) are t
Page 5 and 6: hold the Four Properties. 3 (Hooser
Page 7 and 8: argued that if SPC chose to assume
Page 9 and 10: SPC responded that, if the Agreemen
Page 11 and 12: 11 U.S.C. §365(d)(4). SPC, as debt
Page 13 and 14: discussed other factors that a majo
Page 15 and 16: full); or (2) whenever the $2 milli
Page 17: as the result of a taking, then SPC
Page 21 and 22: properties upon reasonable notice t
Page 23 and 24: payments have a present value equal
Page 25 and 26: the Court concludes that the Agreem
Page 27 and 28: the question of whether there was a

In Re Streckrich Petro Corporation, 08-31860 - Eastern District of ...

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